Water utility's snub irks council

Kentucky American Water has rejected an Urban County Council request to come in and talk about its proposed 37 percent rate increase.

The utility said that its request is before the state Public Service Commission and that the city will have "multiple opportunities" to "ask as many questions as it desires" as that case unfolds. The city routinely intervenes to get a seat at the table in rate cases.

The company's response, delivered hours before Tuesday's council work session, did not sit well with council members. And, like a increasing number of issues, it got caught up in the mayor's race.

"I am extremely disappointed by their response," 10th District Councilman Doug Martin said. "This is a very substantial rate increase, and many citizens ... have serious questions about the steps Kentucky American is taking to minimize the potential increase."

Ninth District Councilman Jay McChord called it "a missed opportunity."

He said he has constituents who are upset and frustrated at the requested increase. "There's nowhere for them to easily go and get their questions answered," he said.

Twelfth District Councilman Ed Lane said that from a legal standpoint, the water company might be acting appropriately to decline to answer questions from the council.

But from a public relations standpoint, "It would be nice for Nick Rowe to stop by and talk to council," Lane said. Rowe is president of Kentucky American.

Along with its "thanks, but no thanks," response, Kentucky American sent along a copy of its February news release announcing that it was asking for a rate hike. The release said that more than 90 percent of the requested increase would go toward building a $162 million treatment plant and pipeline to increase the water supply. The project is expected to be completed by late summer.

Kentucky American officials appeared before a council planning committee in August 2007 to tout a proposed plant on the Kentucky River north of Frankfort, along with a 31-mile pipeline to carry the water to Lexington. The Louisville Water Co., which pushed a plan to pipe treated Ohio River water from its Jefferson County plants, had appeared earlier.

Kentucky American spokeswoman Susan Lancho said the company was willing to talk to the council then because "there was really an open debate in the community" about which plan was better.

The PSC, which examined the issue in depth, eventually decided the long-term costs of the Kentucky American and Louisville Water Co. plans to be nearly identical.

It approved the Kentucky American plan — the only one that was officially before it — and said the Louisville plan "never evolved beyond a series of concepts."

Mayor Jim Newberry, who is seeking re-election, issued a statement Tuesday saying Kentucky American's decision not to come to the council was "regrettable," adding that the city will "staunchly oppose" higher water bills.

Vice Mayor Jim Gray, who is running for the top spot, issued a statement saying that in January 2008, he and other council members asked Newberry to look for more affordable options to Kentucky American's plan, and Newberry refused.

That was during a period in which the Public Service Commission was asking Lexington whether the city had a position on the water supply issue. The PSC also suggested the city might want to consider a partnership with Kentucky American.

The council responded with gridlock — and no answer. Some council members wanted to pay a University of Kentucky expert $15,000 to compare the economics of the Kentucky American and Louisville plans, but that effort was defeated 8-7.

The proposed increase would raise the Lexington-based water company's overall revenue by nearly $26 million a year.

An average residential customer's water bill, based on 4,470 gallons of water a month, would go from about $25 a month to almost $35 a month.

This rate request follows an 18 percent increase that was granted last June. In that case, the company had asked for 32 percent more. The PSC historically has granted the company 50 percent to 60 percent of what it asks for.

Related stories from Lexington Herald Leader